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It has never been more expensive to die, with the cost of dying now rising twice as fast as the cost of living.

It now costs around £5,000 on average to arrange a funeral, with the average price of a burial plot just under £2,000.

The cost of burying a loved one has increased by 20pc in three years, according to funeral comparison site Beyond, more than double that of the overall price increase of other goods over the same period.

Cremation is more common than burial for British funerals today, and the average price for cremation is now close to £1,000. Costs have risen by 17.6pc in three years.

Many people are unaware of the extra costs that can be involved. Funeral bill “add-ons” such as special coffins, pall bearers, embalming and urns could potentially mean paying thousands on top of a basic service.

Life is expensive and now death is becoming an equally costly affairRahael Griffin

Experts have warned that a lack of competition in the industry is driving up costs.

James Dunn, co-founder of Beyond said: “The number of people dying each year is fairly predictable so it’s staggering to see the cost of dying race ahead of the cost of living by such a margin.”

London is the most expensive place to die, in part due to the relative scarcity of burial plots, which drives up prices. However, Wales and the south west of England have seen the sharpest increase in funeral costs over the past 12 months: prices have risen in these two areas by an average of 12pc.

“Competition and transparency are going to be key over the next few years if the costs of cremations and burials are going to be prevented from rising unchecked,” Mr Dunn added.

The Competition and Markets Authority recently announced it was investigating the funeral industry, looking at how prices have changed over time. It also said it would make recommendations to the Government to change regulation to make it easier for consumers to get the best deal.

Rachael Griffin, tax and financial planning expert at Old Mutual Wealth said: “Life is expensive and now death is becoming an equally costly affair.”

Inflation means all prices have gone up, but funeral costs have risen far above those levels. Whether or not those prices are justified is hard to tell as costs are murky. Transparency is crucial, particularly in an industry that deals with a huge amount of vulnerable customers.”

The Treasury launched a separate investigation into the regulation of the pre-paid funeral plan market, which has benefited from a massive uptake in consumer interest in recent years. There are also industry-led schemes to identify reputable providers, such as the registration scheme run by the Funeral Planning Authority.

Simon Jacobs of life insurance provider Aegon said: “We deal with bereaved families every day while processing life insurance claims and see first-hand the stress a funeral and its cost can cause.

"We speak to people who are often at a loss as to how they might get the money to pay for a funeral at such short notice. During such a vulnerable time people need to be reassured that they’re being treated fairly and not paying more than they should for funerals.”